Pier Sixty has agreed to pay $8.5 million to settle the overtime and tip misappropriation claims of its servers, according to court documents filed in federal court last week. Approximately 2,500 workers will share in the settlement. The Complaint against Pier Sixty, a premier banquet hall in New York City, alleged that the banquet facility misappropriated gratuities when it charged its customers a 20-22% service charge but failed to distribute the service charge monies in full to its waitstaff. The lawsuit also alleged that the banquet hall failed to pay its workers overtime pay as required under the Fair Labor Standards Act. The Pier Sixty case underscores the potential liability that restaurants, banquet halls, and caterers face when they do not pay servers the money they receive for service charges for customers in New York. In Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008), the New York Court of Appeals stated that, “a charge that is not a voluntary payment may be a ‘charge purported to be a gratuity’ within the meaning of the New York Labor Law statute.” The New York State Hospitality Industry Wage Order, which went into effect January 1, 2011, prohibits employers from demanding, accepting, or retaining, directly or indirectly, any part of an employee’s gratuity or any charge purported to be a gratuity, and specifically states that a charge purported to be a gratuity must be distributed in full as tips to the service employees or food servers who provide the service. A charge for the administration of a banquet, special function, or package deal must be clearly identified as such and customers must be notified that the charge is not a gratuity or tip. The proposed $8.5 million settlement, which still must be approved by U.S. District Court Judge Paul A. Engelmayer, is the largest payment to date of any reported wage and hour lawsuit in the New York hospitality industry. The servers in the lawsuit were represented by D. Maimon Kirschenbaum and Denise Schulman of Joseph, Herzfeld, Hester & Kirschenbaum. Pier Sixty was represented by Carolyn Richmond of Fox Rothschild LLP.